TORONTO, Aug. 3 /CNW/ - Richards Packaging Income Fund (TSX: RPI.UN) (the "Fund") announced today results for the quarter ended June 30, 2010.
"Second quarter organic sales growth fell short of management expectation of $1.0 million, or 2.0%" commented Gerry Glynn, Chief Executive Officer. Total revenue was down $3.9 million, or 8.0%, due to organic revenue shrinkage of $1.0 million, or 2.3%, and the translation of Richards Packaging US revenue as the Canadian dollar strengthened by U.S./Cdn. 11 cents. EBITDA(1) decreased $0.6 million, or 9.6%, with EBITDA at 12.3% of sales. Net income was $2.1 million, or 21.1 cents per Unit, down 67.7% over the same period in 2009, due primarily to the absence of unrealized gains on financial instruments ($5.4 million).
"On balance, the first half results were satisfactory with margin and cost improvements fully offsetting the $0.9 million adverse EBITDA impact of the translation of Richards Packaging US as the Canadian dollar strengthened by U.S./Cdn. 14 cents" added Mr. Glynn. Total revenue was down $5.2 million, or 5.4%, due to organic revenue growth of $1.2 million, or 1.3%, being more than offset by currency translation. EBITDA(1) was flat at $11.2 million, with EBITDA at 12.4% of sales. Net income was $4.6 million, or 45.6 cents per Unit, down 33.7% over the same period in 2009, due primarily to the absence of unrealized gains on financial instruments ($3.9 million).
The revenue shortfall during the second quarter resulted in a further inventory increase of $1.6 million to a total of $3.6 million for the first half which will be recovered over the remainder of the year by slowing purchases.
The Fund paid monthly distributions of 6.55 cents per Unit during the first half of 2010, which represented an annualized yield of 9.8% on the June 30th closing price of $8.00 per Unit. The payout ratio(3) for the second quarter was 57% and for the first half of 2010 was 58%. During the second quarter, an additional 20,600 Units were purchased for cancellation at an average price of $7.25 per Unit.
Details of the Fund's results are currently available on Richards Packaging's website at www.richardspackaging.com and on SEDAR at www.sedar.com on August 4th.
About Richards Packaging Income Fund
The Fund owns 85% of Richards Packaging Inc. ("Richards Packaging"), the leading packaging distributor in Canada, and third largest in North America. Richards Packaging is a full-service packaging distributor targeting small- and medium-sized North American businesses. Richards Packaging has operated for over 97 years and currently serves over 10,000 regional food, wine and spirits, cosmetic, specialty chemical, pharmaceutical and other companies from 20 locations throughout North America.
(1) Management defines EBITDA as earnings before amortization, interest,
unrealized losses (gains) on financial instruments and taxes. EBITDA
is the same as income before under noted items, income taxes and non-
controlling interests as outlined in the interim consolidated
financial statements. Management believes that in addition to net
income, EBITDA is a useful supplemental measure for investors of
earnings available for distribution prior to debt service, capital
expenditures and taxes. Management uses this measure as a starting
point in the determination of earnings available for distribution to
unitholders and exchangeable shareholders. In addition, EBITDA is
intended to provide additional information on operating performance.
This earnings measure should not be construed as an alternative to
net income or as an alternative to cash flow from operating,
investing and financing activities as a measure of liquidity and cash
flows. EBITDA does not have a standardized meaning prescribed by GAAP
and therefore the method of calculating EBITDA may not be comparable
to similar measures presented by other companies or income trusts.
(2) Management defines distributable cash flow, in accordance with the
Company's credit agreement, as EBITDA less interest, cash income tax
expense, maintenance capital expenditures and loan payments. The
objective of presenting this measure is to calculate the amount which
is available for distribution to unitholders and exchangeable
shareholders. Investors are cautioned that distributable cash flow
should not be construed as an alternative to cash flow from
operating, investing and financing activities as a measure of
liquidity and cash flows. Distributable cash flow does not have a
standardized meaning prescribed by GAAP and therefore the method of
calculating distributable cash flow may not be comparable to similar
measures presented by other income trusts.
(3) Management defines payout ratio as distributions and dividends
declared over distributable cash flow(2). The objective of presenting
this measure is to calculate the percentage of actual distributions
in comparison to the amount available for distribution. Payout ratio
does not have a standardized meaning prescribed by GAAP. The method
of calculating the payout ratio may not be comparable to similar
measures presented by other income trusts.
(4) This release contains certain forward looking information and
statements within the meaning of applicable securities laws
(collectively "Statements") regarding future growth potential,
results of operations, performance and business prospects and
opportunities of the Fund. The Statements are frequently identified
by the use of such words as "will", "may", "could", "expect", "plan",
"anticipate", "believe" and other similar terminology. These
Statements reflect management's current beliefs and are based on
information currently available to the management of Richards
Packaging. A number of factors could cause actual events or results
to differ materially from those predicted, expressed or implied in
the Statements. Factors that could cause such differences include,
among other things, changes in customer and supplier relationships,
the extent and duration of the worldwide recession and the impact on
order volumes and pricing, competition in the industry, inventory
obsolescence, trade risks in respect to foreign suppliers and
fluctuations in foreign exchange and interest rates. Although the
Statements contained in this release are based upon what management
believes to be reasonable assumptions, there can be no assurance that
actual results will be consistent with these Statements. These
Statements are made as of the date of this release and the Fund
assumes no obligation to update or revise them to reflect new events
SOURCE Richards Packaging Income Fund
For further information: For further information: Gerry Glynn, Chief Executive Officer, Richards Packaging Inc., (905) 670-7760, firstname.lastname@example.org; Enzio Di Gennaro, Chief Financial Officer, Richards Packaging Inc., (905) 670-7760, email@example.com